How do online approval credit cards work?

Online approval credit cards are also known as instant approval credit cards despite the fact that you will only be approved if you meet certain qualifications. Most companies today focus most of their efforts on attracting online consumers.

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The use of the Internet is both quick and easy for consumers and a cost saving measure for credit card companies. There are several advantages to online credit card applications but there are also some downsides you should be aware of before you begin the process.

What types of credit cards can I apply for online?

Today, almost any type of credit card can be researched and applied for online. Most online approval cards are geared towards those with good to excellent credit ratings who have never declared bankruptcy or missed payments on debts. You can easily search online for a variety of credit card types including:

Business credit cards
Reward point credit cards
Low interest credit cards
Cards with no annual fees
Student credit cards
Secured credit cards for those with poor credit

How does the online application process work?

Before you decide to begin the online credit card process, you should know your credit score and the details of your credit report so that you will have an idea regarding the likelihood that you will be approved. You will also know if you need to find ways to improve your credit score. You should obtain copies of your credit report from the three major credit agencies.

The Federal Trade Commission reminds people that under federal law, they are entitled to one free credit report from each credit bureau during each calendar year. It is important to check these reports for errors, which could result in denial of a credit card. By taking some simple steps to correct any errors, you could improve your credit rating enough to qualify online for a credit card.

Next, you need to begin comparing credit cards. This is where the Internet comes in very handy. Just make sure you take your time looking over offers and read all fine print.

You need to consider what type of card you need, what you will use it for, and how much credit you need. You also should compare credit card interest rates, annual fees, and penalties for late payments. For reward cards, check to see when rewards expire. Also, check into fees for a credit card balance transfer if you plan to take advantage of this.

What information will you need when you complete an online application?

After researching credit cards and making a decision about the card that best meets your needs and offers the best deal you are ready to start the online application. After submitting your application, it is possible you will receive a response in just a couple of minutes as to whether you have been approved. Online credit card applications all differ but most typically ask for the same types of information that you should have handy. This includes:

Basic personal information (full name, address, phone number, date of birth)
Social Security number
Employer and personal income information
Household income
Bank account information for all accounts
Whether you own or rent your home
Monthly rent or mortgage payment amount

There will also be a series of boxes for you to check. Make sure you read all of the fine print and do not simply click on the boxes without reading. The fine print will give information about fees, penalties, and other aspects of the card that you need to be aware of.

Are there downsides to online approval credit cards?

As with anything that seems quick and easy, there are always downsides. The ease of the process often makes it too tempting for consumers to apply for multiple credit cards. In doing so you not only put yourself in a situation that could lead to increased spending and debt, but you lower your credit score each time you apply for a card.

Additionally, due to the nature of the process you may be tempted to apply when you are short of time, which could lead to failure to read all of the fine print. You may obtain a credit card only to find out that you are now being hit with many hidden credit card costs.

Finally, although today’s technology generally leads to safe and secure online transactions, you want to make sure the website you are entering personal information into is legitimate and protected. The web address should begin with https, which indicates a secure website.

Consumer Reports also cautions consumers in their December 2011 online issue about being careful of attractive online credit card deals. These may seem hard to pass up but always do your research and read over all information. Some of the deals you may see include: